What Is a Prepaid Debit Card?

A prepaid debit card is a card that is issued by a financial institution and is preloaded with funds that can be spent just like a regular debit card. It can be used to make purchases in person or online, and in many cases, even be used for ATM withdrawals.

The card differs from a regular debit card or credit card in the fact that it does not use credit and it is not associated with a specific bank account. These cards are popular for their convenience and also are much safer than a typical credit or debit card.

If a prepaid card is lost or stolen, the amount lost is only what is left on the card. However, if a debit or credit card is lost, the card can potentially be used to access or spend funds that belong to a person’s bank account, or run up credit to the limit on a credit card.

These cards also prevent overdraft charges, since a person can only spend the amount loaded onto the card and no more. For this reason, many parents choose to use these for their kids, so that they can ensure they do not have to pay expensive overdraft fees for their child's account.